Naira crashes to 436 as dollar reserves shrink

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Oyetunji Abioye

The naira hit a new record low of 436 against the
United States dollar at parallel market on Thursday,
down from 428 on Wednesday, as dollar shortages
on the official market persist.

The development came amid depleting external
reserves, which stood at $24.8bn on Monday. It
also came two days after the Central Bank of
Nigeria’s Monetary Policy Committee met and left
the lending rate and other key economic indicators
unchanged.
The latest data posted on the CBN website showed
that the foreign exchange reserves were down by
3.4 per cent from a month ago to its lowest level
in more than 11 years, as the apex bank sells the
greenback at the interbank market to support the
naira.

At the interbank official market, the naira was
quoted at 313.07 to the dollar on Thursday, down
from 310.08 on Wednesday.
Economic and currency analysts said there had
been no significant policy response to the fall in
the reserves, further fuelling the concerns.
An analyst at Afrinvest, a local research and
investment advisory firm, Mr. Ayodeji Ebo, said it
was difficult to trace the reason for the sustained
fall in the value of the naira after the MPC’s
decision to keep the interest rate unchanged.
He said the development could be traced to the
decision or the imminent maturity of the CBN’s
forward contract.
“Most stakeholders were expecting the MPC to fine
tune the interest rate. This was not done and the
fall could be a reaction to the development. It
could also be that some people are trying to keep
the dollar ahead of the CBN’s forward contract that
is about to mature,” he stated.
The Association of Bureau De Change Operators of
Nigeria on Thursday predicted that the naira would
recover by Monday due to the introduction of
Travelex, a licensed forex dealer.
Travelex, an international money transfer
organisation, was officially directed by the CBN to
distribute forex to the BDC operators by Monday.
The President, ABCON, Alhaji Aminu Gwadabe, was
quoted by the News Agency of Nigeria to have said
in Lagos that a licensed forex dealer would
enhance transparency in the distribution network.
He said that forex distribution would be efficient
and uniform across ABCON members, unlike what
was obtainable in the past.
According to him, Travelex has the technology to
sell forex to about 1,000 BDCs in a couple of
hours, which is a major advantage.

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